A $200 million pension fund that union Regional Transportation District drivers, mechanics and other on-the-ground employees count on for retirement is slowly going bust.

Union members and the RTD agreed to up their contributions to the pension during negotiations last year, but even so, the pool is "in funding peril" and will be fully depleted by 2032, a consulting group warned the RTD board.

The news stunned board members and the 1,670 employees and retirees enrolled in the local Amalgamated Transit Union 1001 plan, as well as the people who collect portions of pensions left to them by deceased spouses.

Board members were assured that the foundering fund would not hinder the district's finances or operations, including the financially troubled FasTracks mass-transit program.

Still, the analysis of the fund's performance by consultants and actuaries Gabriel Roeder Smith & Company was sobering. It showed that in 2002, the pension pot was funded at 106.39 percent, but by 2008 it had slipped to 86.03 percent. Last year, the pension was 47.52 percent funded.

The consultants said the 11 percent total contribution to the pension fund — 8 percent from RTD and 3 percent from the ATU — began falling behind in 2003. By 2012, the total contributions made up only 33.5 percent of the fund, the consultants said.

"This is sobering," RTD board chairman Chuck Sisk said.

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Both sides agreed to boost their contributions to the fund in negotiations of a five-year contract last year — RTD goes to 12 percent over the next two years and then 13 percent through 2017. The ATU chips in 4 percent over the next two years and 5 percent through 2017.

But even with the increased contributions and an estimated net return on investment of 7 percent per year, the fund still will be depleted by 2032, the consultants said.

If the fund managed a 14 percent return on investment last year, the pension will survive an additional two years,
the consultants said. To reach 100 percent funding by 2043, the fund would have to return 14 percent a year until 2019.

Board members who supported the increased agency pension contribution said the fund needs to be viable.

"This is much more of a moral than legal issue," board member Judy Lubow said. "These are our employees. We have a higher duty to them."

Retired bus driver Sharon Horn's pension supplements her
Social Security income. "If I didn't have that pension, I'd be really in trouble."

Kris Chambers, 51, whose husband worked in RTD's Boulder maintenance shop for just short of 20 years until he died of cancer nine years ago, invests his pension in a retirement nest egg for herself.

"So many of these guys have worked so hard, and this is their money they paid into," she said.
"I can't believe this is going to happen."

RTD officials said the ATU pension is falling victim to some of the same woes dogging similar public employee pension plans.

"We are a victim of our own success," said Sisk. "People want to stay here working at RTD longer, and you have a plan where a lot of people are entitled to have benefits that are much more significant dollar-wise than a new employee."

There are several ways RTD pensions are paid. Some plans pay no longer than 10 years. But some retirees are eligible to draw pensions until their deaths, and people are living longer.

Board member Bruce Daly, while joking, was more blunt in his assessment of the future of the fund after hearing the consultant's report.

"ATU retirees really need to step up their death rate," he said.

The health of the pension fund has been in a fairly steady decline over the last 20 years, ATU president Julio Rivera said, but it was especially hurt by the country's financial meltdown that began in 2007.

Rivera blamed a law passed in 1988 that mandated RTD contract out at least 20 percent of its bus service. Today, about 50 percent of the agency's bus service is run by contractors, Rivera said.

Currently, he said, there are nearly 800 bus operators working for two private companies who would have otherwise contributed to the union's pension.

"Over the last two decades, that drain of participants has damaged the pension plan," Rivera said. "If not for privatization, all of our members would have a pension and it would be in a much better shape."

The ATU pension is governed by six trustees, three appointed by RTD and three by the ATU president.

Investment strategies may have also played a role in the decline of the ATU fund. RTD's Salaried Employee Pension Trust returned about 20 percent on investments last year, compared with 14 percent by the union plan.

"That's a big difference," Lubow said.

RTD chief financial officer Terry Howerter said it might be due to the salaried pension fund investing more in real estate.

Both RTD and ATU say a change to the way pension benefits are paid that became effective Jan. 1, 2011, could help shore up the sagging fund. For example, employees hired after that date must work for 10 years, instead of five, to be vested in the pension. Employees with 20 years of service now receive full retirement benefits at age 60 instead of 55.

RTD officials say there is still time to reverse the fund's losses.

"We had some serious financial projections for the FasTracks project, and none of those have come true," RTD spokesman Scott Reed said. "This is a similar situation, a worst-case scenario where nothing else has changed. I don't think the plan's failure is a likely scenario because additional actions can be taken."

However, board member Natalie Menten said the ATU needs to contribute much more to the fund to keep RTD from having to cut services just to maintain it.

"The fact that RTD employees are paying only 4-5 percent versus the taxpayers' contribution at 12-13 percent should be a wake-up call to voters, taxpayers, union members and public transportation users," Menten said. "Why all the other board members voted yes, and still believe the five-year agreement is something to be proud of, is beyond me."

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